SOCIAL DISCOUNTING IN THE ECONOMIC EVALUATION OF HEALTH CARE PROGRAMMES

Author(s)

Joice Valentim, MSc, Doctorate student/researcher1, José Mauricio Prado Jr, PhD, Assistant Professor21University of São Paulo, São Paulo, SP, Brazil; 2 IMT Lucca Institute for Advanced Studies, Lucca, Toscana, Italy

OBJECTIVES: To provide a ready-to-use framework for computing the social discount rate, the proper rate for discounting of social programmes, including health care programmes, given the inoptimality of market mechanisms to derive the optimal discount rate. METHODS: A social time preference methodology derived from Feldstein work (“The derivation of social time preference rates", Kyklos 18, 1965) is applied to calculate social discount rates as social time preference (STP) rates across 167 countries for a specific year (2006) and across time from 2005-2050 for a country case (Brazil). STR rate derived is defined as     dt = (1 + π t) 1-α (1 + γt) σ (1 + r) – 1, where α is the population weight,  π  the population growth, γ the per-capita income growth, σ the coeffcient of risk aversion and r the pure time preference rate. Data were obtained in the literature and databases (World Development Indicators (World Bank, 2007), World Economic Outlook (IMF, 2007) and IBGE (Instituto Brasileiro de Geografia e Estatística)). RESULTS:  Our computed values vary across countries and across time. The average STP rate for the 167 countries in the sample is 6.8% and the standard deviation 3.9%. The figures ranged from -6.8% for Equatorial Guinea to 18.6% for Armenia. For Brazil, STP rates display a decreasing profile across time, with an average rate of 4.7%. Computed figures vary from 3.6% to 5.5%. CONCLUSIONS: The standardisation of the use and estimation of discount rates in the economic evaluation of health care programmes (EEHCP) is a core quest, especially with the increase of EEHCP as a tool for decision making. The variation of STR rate results indicate the need for country-specific discount rate estimation.

Conference/Value in Health Info

2008-11, ISPOR Europe 2008, Athens, Greece

Value in Health, Vol. 11, No. 6 (November 2008)

Code

PMC6

Topic

Economic Evaluation

Topic Subcategory

Cost/Cost of Illness/Resource Use Studies

Disease

Multiple Diseases

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